Retirement tax questions

Let's assume someone qualifies for TTS but not MTM.  I assume all expenses are on Sch. C and all capital gains are on Sch. D. Income for Sch.C is 0. I'm not tracking step #3.

 

Can you clarify step #3? The online version doesn't  allow one  to record a negative number in "Other income" in Sch. C.